The Euro began the new week stronger as risk appetite continued to show its face in Asia, bidding yen crosses higher and boosting stocks to one month highs. Although it was only there for a few fleeting minutes, the EUR/USD was able to break the 1.2200 level after an opening that saw a gap higher and early lows at 1.2114. While markets were understandably thinned due to holidays in Australia and China, the moves were reinforced by Asian equities hitting one month highs. Comments from EU President Van Rompuy stating that currency markets have been hurt by rumors and false perception helped keep risk afloat. While a good deal of the moves in the European currency could be attributed to short covering as the current global picture continues to brighten, the 1.2200 will remain a tough nut to crack in the upcoming London Session.
As the Nikkei posted gains just shy of 2%, the yen was lower against all of its counterparties. EUR/JPY moved up a big figure from Friday’s 111.00 close, GBP/JPY topped 134.25, and the AUD/JPY closed in on prior June highs of 79.00, falling short of that goal by 35 pips. USD/JPY was flirting with the 92.00 level at day’s end, but that particular mark should be a tough one to get through.
Retail sales in New Zealand were a bit weaker than anticipated, (-0.3% vs. -0.2%) but the NZD/USD pair shrugged off the data to crest the 0.6940 level. The AUD/USD made gains on the wave of risk appetite, posting highs near 0.8570, levels not seen in almost a month. XAU/USD traded firmer between $1228.00 and $1232.50 amidst the weak dollar climate.
In the short term, World Cup matches could add to the thinned markets in the London session while traders will look for new reasons to sell the Euro if and when it gets through the 1.2200 level. While the rest of the day has no significant data, tomorrow in Asia the RBA will release its monetary policy meeting minutes, an event that is usually followed by volatility.